Correlation Between American Funds and Icon Financial
Can any of the company-specific risk be diversified away by investing in both American Funds and Icon Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Funds and Icon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2055 and Icon Financial Fund, you can compare the effects of market volatilities on American Funds and Icon Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Funds with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Icon Financial.
Diversification Opportunities for American Funds and Icon Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Icon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2055 and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and American Funds is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Funds 2055 are associated (or correlated) with Icon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Financial has no effect on the direction of American Funds i.e., American Funds and Icon Financial go up and down completely randomly.
Pair Corralation between American Funds and Icon Financial
Assuming the 90 days horizon American Funds is expected to generate 1.03 times less return on investment than Icon Financial. But when comparing it to its historical volatility, American Funds 2055 is 1.24 times less risky than Icon Financial. It trades about 0.07 of its potential returns per unit of risk. Icon Financial Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 906.00 in Icon Financial Fund on August 30, 2024 and sell it today you would earn a total of 247.00 from holding Icon Financial Fund or generate 27.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2055 vs. Icon Financial Fund
Performance |
| Timeline |
| American Funds 2055 |
| Icon Financial |
American Funds and Icon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Icon Financial
The main advantage of trading using opposite American Funds and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Icon Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Icon Financial will offset losses from the drop in Icon Financial's long position.| American Funds vs. Ab Municipal Bond | American Funds vs. Ab Bond Inflation | American Funds vs. Ab Municipal Bond | American Funds vs. Ab Bond Inflation |
| Icon Financial vs. HUMANA INC | Icon Financial vs. Aquagold International | Icon Financial vs. Barloworld Ltd ADR | Icon Financial vs. Morningstar Unconstrained Allocation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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